Tuesday, September 16, 2008

The Fed snatches AIG at last moment

Bloomberg:

Sept. 16 (Bloomberg) -- American International Group Inc. avoided the worst financial collapse in history by accepting a rescue that provides an $85 billion loan from the federal government in return for a majority stake.

I feel bad for Mr. Greenberg who built the company. But I don't feel bad for the other equity holders that is what equity risk. Just like Bear and Lehman profits had becoming from a highly leveraged strategy with total disregard for risk. The shareholders benefitted and then they lost. That is how high leverage works.